Chapter 6: Derivatives in the Financial Services Sector Quiz

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What is the main purpose of each Lloyd's syndicate?

To minimize administration expenses

To pay out claims exceeding premiums

To write insurance and receive profits (correct)

To insure specialist and complex risks

In the context of insurance, what is the role of reinsurance companies?

To develop innovative insurance policies

To compete with Lloyd's syndicates

To ensure profitable premiums for insurers

To protect insurers by laying off some risks (correct)

Which sector of risks does Lloyd's specialize in insuring?

Retail industry risks

Casualty, property, and marine risks (correct)

Information technology risks

Agricultural risks

What makes Lloyd's of London known worldwide in the insurance industry?

Its reputation for innovation and insuring unusual risks Signup and view all the answers

What distinguishes reinsurance contracts from regular insurance policies?

Reinsurance contracts can involve sharing all premiums and losses Signup and view all the answers

Which of the following is NOT a major reinsurer mentioned in the text?

AIG Re Signup and view all the answers

What is the purpose of an insurer laying off some risk with a reinsurer?

To protect themselves against potential losses Signup and view all the answers

How does Lloyd's of London contribute to the insurance industry through innovation?

By developing policies for aviation, burglary, and cybercrime Signup and view all the answers

What type of risks does Lloyd's specialize in?

Specialist and complex risks in various sectors Signup and view all the answers

Why do insurers use reinsurance companies according to the text?

To hedge against risks associated with their insurance policies Signup and view all the answers

Which term is used interchangeably with fund management in the text?

Asset management Signup and view all the answers

What is the primary focus of private client fund managers as mentioned in the text?

Investing the money of relatively wealthy individuals Signup and view all the answers

What distinguishes institutional fund managers from private client fund managers according to the text?

Type of assets they manage Signup and view all the answers

Where is the UK positioned in terms of fund management globally?

Second Signup and view all the answers

What makes London stand out as a prominent international centre for fund management?

Its ability to attract significant overseas funds Signup and view all the answers

How are fund managers, investment managers, and asset managers related in the context of the text?

They are terms used interchangeably to describe professionals in the industry Signup and view all the answers

What distinguishes the activities of institutional fund managers from private client fund managers?

The source of the funds they manage Signup and view all the answers

Why is the UK considered a significant hub for fund management globally?

Because it serves a large number of domestic and overseas clients Signup and view all the answers

What activity characterizes the work of investment managers according to the text?

Buying and selling shares, bonds, and assets to increase clients' portfolio value Signup and view all the answers

How do fund managers contribute to the financial industry?

By running portfolios of investments for a variety of clients Signup and view all the answers

What distinguishes unit trusts from open-ended investment companies (OEICs) in the field of fund management?

Their legal structure and regulatory requirements Signup and view all the answers

'Asset management' is another term used interchangeably with which main term in the text?

'Investment management' Signup and view all the answers

What characterizes the investments made by private client fund managers according to the text?

'They originate from relatively wealthy individuals' Signup and view all the answers